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Tesla's electric vehicle dominance is about to have 'serious competition,' Morgan Stanley says

Key Points
  • Morgan Stanley expects Rivian will be "the next serious competition from a 'clean sheet' start-up."
  • Analyst Adam Jonas estimates that currently Tesla makes about 80 percent of the electric vehicles in the U.S.
  • Rivian, a Detroit-area start-up, previewed its R1T electric truck prototype at the Los Angeles Auto Show in November.
VIDEO4:0604:06
Former Tesla CEO on electric vehicle growth

Tesla's domination of the electric vehicle market is "unsustainable" and will soon be disrupted by start-up Rivian, Morgan Stanley analyst Adam Jonas said Monday.

Jonas, whose thoughts on electric autos are widely followed on Wall Street, expects Rivian will be "the next serious competition from a 'clean sheet' start-up with access to talent & capital focused on the fastest growing segments of pickup trucks & SUVs." He estimates that Tesla makes about 80 percent of the U.S. EV market, capturing as much as 90 percent of U.S. electric vehicle revenues.

Rivian, based outside Detroit, previewed its R1T electric truck prototype at the Los Angeles Auto Show in November. Rivian said the R1T will deliver 400 miles of range, with four individual motors allowing for all-wheel-drive. Additionally, Rivian CEO R.C. Scaringe said the R1T will be able to hit 60 mph in 3 seconds and tow up to 11,000 pounds.

RJ Scaringe, founder and chief executive officer of Rivian Automotive Inc., unveils the R1T electric pickup truck, left, and R1S electric sports utility vehicle (SUV) during a reveal event at AutoMobility LA ahead of the Los Angeles Auto Show in Los Angeles, California.
Bloomberg | Bloomberg | Getty Images

Tesla may unveil an electric pickup truck this summer, CEO Elon Musk said during the company's fourth-quarter conference call. In December, Musk talked extensively on Twitter about what he would like to include in a pickup truck design, including all-wheel drive with "crazy torque & a suspension that dynamically adjusts for load."

Rivian is also building the R1S, an electric seven-passenger SUV. Rivian says the R1S will also have a range of over 400 miles.

Jonas said Morgan Stanley has a "strong belief that all-electric vehicle architecture will need a truly 'clean sheet' approach" to take on Tesla, rather than "adapting existing legacy [original equipment manufacturer] architecture."

"We believe companies like Rivian will take elevated importance in investors' minds as EVs become the focus of OEM investment and strategy," Jonas said.

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– CNBC correspondent Paul Eisenstein and CNBC's Michael Bloom contributed to this report.